New Analysis Confirms Charters Do Not Cause District Financial Problems

Charter schools have become a popular scapegoat for financial problems facing districts across California. In fact, the state assembly is expected to vote this week on two bills that would significantly curb public, nonprofit charters, even though a task force appointed by the governor to study their impact has yet to issue its report.

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The blame assigned to charter schools is misplaced, according to a new analysis from the Center on Reinventing Public Education, an independent, nonpartisan center at the University of Washington-Bothell. Speak UP spoke with Ashley Jochim, a senior research analyst at CRPE, and one of the authors of the California Charter Schools: Costs, Benefits and Impact on School Districts report. 

Speak UP: Why did CRPE decide to look into the impact of charter schools on California school districts?

 Jochim: Over the last two years or so, we’ve seen this charge that charter schools drain resources from traditional public schools gain traction. And really nowhere else is this more prominent than in California where teacher strikes in Los Angeles and Oakland over the last year or so really brought this issue to a fore. It was in part in response to those issues that legislators at the state level have gotten more involved. There was a special commission established at the state level to look into this issue, and there is also just a lot of political activity right now. We really wanted to understand, first of all, what’s the rationale behind these arguments? Why do people think that charter schools drain resources from traditional public schools? And then we wanted to understand whether they were backed by evidence. And that’s what motivated us to get involved.

Speak UP: Do charter schools drain resources from traditional public schools?

 Jochim: Statewide, when you look across the 10 largest districts, the relationship between district enrollment loss and the growth in charter schools has really ebbed and flowed over time. What this suggests to us, and when you look at the rest of the data, including district enrollment loss more historically, what you see is that enrollment loss has long been the norm. Enrollment changes in school districts all the time. It grows and it shrinks. And what we have seen across the state, but especially in localities like Los Angeles and Oakland, is that charter schools are actually not really growing much at all anymore. Their enrollment has stabilized, or in the case of Los Angeles, even slightly declined over the past year or two. And so when you look at this as a problem today or even moving forward for the next several years, charter schools are contributing very little or anything at all to being able to explain the district’s enrollment loss. Right now, L.A. Unified is losing more than 10,000 kids a year. That is a result of demographic pressures that have always shaped school districts.

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Speak UP: Can you talk about some of those pressures that are contributing to both decreased district enrollment and financial instability? And maybe I shouldn’t lump those things together.

 Jochim: Yeah, I think it’s worth tackling them separately.   Enrollment is shaped by a couple factors that we know just intuitively if you have a family or know families. Cities grow and shrink over time as a result of changes in the economy, as a result of immigration, so families moving from one state to another but also from out of the country to a state. It’s also shaped by the dynamics in a city around school enrollment. Private school enrollment affects the district’s enrollment because some of those kids would otherwise be educated in the school district if they weren’t attending private school. The number of families that are homeschooling will affect district enrollment. And finally, a little examined factor but one that I think is especially important in Southern California has to do with inter-district transfers. So just anecdotally someone who lives in Huntington Beach told me, “You know, our local elementary school would be under-enrolled if we didn’t admit students from other school districts.” This is a common thing in California. It’s allowed under state law. I think districts can use this strategically to boost their enrollment when they have fewer kids.

That also affects districts on the losing end of that spectrum. So some districts are gaining and some are losing. I think that’s true across all these pressure points.

You have demographic factors. Birth rates are another really important one. People are having smaller families than they used to. If we look at this historically, Los Angeles sort of peaked in the early 2000s. They are going to be facing enrollment losses for the foreseeable future.

On the financial side, there are a few factors I would point to. One is that inaccurate enrollment and budget projections really can fuel overspending, which in turn leads to these escalating financial challenges. To give you an analogy, you can’t balance a checkbook without knowing how much money is in your checking account and how much you’ve spent. Literally that’s the position some districts are in. They don’t have proper financial controls in place. They have not accurately estimated how much money they are going to receive at the beginning of the year. So they are not tracking things well. As a result, a little budget problem can quickly spiral into a very big budget problem. This has been the case in pretty much every district that has faced fiscal distress.

There are two other factors I would point to. One is the way many expenses in education are structured, it makes it really hard to cut back as fewer students enroll. In education we do a lot of funding tomorrow’s services based on today’s students. So as fewer students enroll over time, the liabilities grow larger and there’s no way to catch up. Even when you look at things like the number of teachers a district employs, they don’t do a good job of adapting as enrollment shifts. Reading through the state auditor reports for L.A. Unified, the district has added hundreds of new staff even as enrollment was declining. This includes adding to the ranks of administrators as well as teaching staff and others. You have to wonder why are we adding staff when fewer students are showing up?  There are better ways, more creative ways, we can tackle this. Just to give you a small example, sharing staff between schools can sometimes help districts preserve those extracurricular programs for students even if they don’t have enough students in a school to support a full time instructor.

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The final factor that I want to mention is the state’s funding situation. It’s widely known there’s really not enough money, and how that money is allocated doesn’t always align with the needs of students or staff, and it doesn’t really keep pace with rising costs like pensions. So what we’ve seen over the last 10 years — a period in which enrollment has been declining in many districts mostly because of demographic reasons — those same districts, even as the state has been trying to put more money into education, districts are facing escalating expenses for things they ultimately don’t really control right now. Twenty years ago, a school board agreed to some pension benefits. Today a school board can do anything they want, but they can’t change that commitment. Those rising expenses — when you don’t have more money to support them — what it means is, districts have to cut into the rest of their budget in order to continue to pay for things like that.

Speak UP: One thing we have not talked about but which I know your recent report addressed is how charter schools are doing. What did your research reveal?

Jochim: The best evidence we have on this question in terms of student outcomes comes from the center based at Stanford, which is called CREDO. They found that charter schools in California are modestly outperforming their peers in traditional school districts. But importantly, that those results are a lot stronger for students attending urban charter schools. These are schools in the San Francisco Bay Area as well as in the Los Angeles area, as well as for students of color. People are especially concerned with how charter schools affect those students because they have been historically underserved in traditional public schools. Our take is that any consideration of charter schools in this larger conversation we’re having about charter schools in California, but also in other states around the country, these conversations should be grounded in evidence, and they should consider both the costs and the benefits to students and families and taxpayers. The challenges with the conversation as it typically unfolds is, if you only talk about the costs of charter schools to districts, even if those costs are real, which we don’t find a lot of evidence for, but still, even if they were real, that leaves out an important side of the equation. That is that some students and families might be benefitting from that policy and we need to keep that in mind, as well.

— Leslee Komaiko